Will the regulatory shake-up have an impact on communications?
The Government has published its proposals for the reform of financial services regulation, in the most radical shake-up since, well…the last radical shake-up. If you can summon the energy you’ll find it at http://www.hm-treasury.gov.uk/consult_financial_regulation.htm. It’s all designed to remove the ‘underlap’ (great new coinage, isn’t it?) between the respective remits of the Bank of England, the Financial Services Authority and the Treasury in the regulation of financial services. This underlap meant that things fell through the gaps and nobody was looking at the big picture stuff that caused the financial crisis.
The plans are radical, so much so that in a sea of acronyms for new regulatory bodies – OTS, PRA, CPMA, FPC to name a few – some august old ones are struggling for attention. Many people haven’t noticed the proposed merger of the UKLA (currently part of the FSA) with the FRC as a first step to establish a super-regulator for listed companies under BIS (see section 5.19 of the consultation document).
Confused? This may help:
UKLA (UK Listing Authority): sets down regulations for companies listed on the UK Main Market.
FSA (Financial Services Authority): the overall regulator of financial services industry in the UK.
FRC (Financial Reporting Council): responsible for ensuring high quality corporate governance and reporting in the UK
BIS (Department for Business, innovation and Skills): government department responsible for helping UK businesses.
It’s hard to tell what these changes will bring. However, the current regulatory framework for corporate communications, which is spread across numerous different bodies, suffers from its own ‘underlap’.
Witness the failure to adapt to the rise of the internet as the primary channel of communications. No regulatory body in the UK has the remit to oblige a Main Market listed company to have a website (AIM is of course different), let alone to set disclosure requirements about them. So the focus remains on regulating the content of annual reports, which get longer and less digestible every year, while their relevance as communications documents diminishes with each passing tweet.
In the US, by contrast, new rules will allow companies to use their corporate websites as the primary distribution platforms for price sensitive information rather than wire services. Stock market regulators in the US are trying to adapt to new technology and the fundamental ways in which the internet has changed communications between people and companies.
Who knows what shape the UK model will take, but a move to unify the regulators and give them more teeth should allow for a more progressive and responsive approach to communications regulation.
Posted by Al